“It is not necessary to change. Survival is not mandatory.” This is a quote from W. Edwards Deming, one of the greatest business minds ever, whose writing and views are still applicable today. What law or regulation stipulates that any business in this or any other industry is required to survive?
After almost two decades of consulting in this industry, I can reflect on a number of changes that have occurred in the DME business environment. However, there are none as broad and perilous as competitive bidding, which the Medicare Modernization Act set in motion on Dec. 8, 2003.
A change of this magnitude screams for a change in strategies and processes and, in fact, demands that owners and managers revisit the very core of their business to ensure it is appropriate for the current environment.
Start at the Beginning
Any makeover of a home medical equipment business today must begin by reevaluating both the company's vision and its mission. In many cases, however, the vision statement is a missing component. And while most companies have some kind of mission statement, it's often not well defined or not relevant.
The company vision should be a statement of what you want the company to be. In other words, the vision statement could be defined as “what we're going to be when we've grown up.”
The essence of many vision statements I've seen is very broad and reflects an altruistic desire, such as “our company wants to help people.” But the level of efficiency required for the industry's current environment is almost universally opposed to a broad vision statement. There are some customer segments, for instance, that a provider can do a better job of helping than others. The challenge today is to identify those segments and narrow the company's vision to help them.
I often write and speak of the root cause of all business revenue and expense as being the solution we offer and the customer we offer it to. In HME, the solution to be offered and the target customer should be clear in the company's vision statement. In this industry, the combination of “product and payer” can be substituted for “solution,” because the products you sell are the solution you offer. If you want to offer better respiratory function, for example, then the product you offer is oxygen equipment.
If you modify your company vision to fit the current environment, this necessitates a revision of your company mission. But I also find that mission statements from many HME companies, whether they are small or large, are fairly vague and don't really address what the current elements of the business are or the current conditions that the business is in. The mission statement may even have been developed simply to fulfill an accreditation requirement or for some other purpose, such as creating a business plan when requesting funding.
The mission should be a statement of how the business will achieve its vision. For example, a provider whose vision is “to be the most often referred provider for complex rehab equipment to military veterans” would then restate the company's mission to address how it actually becomes the most often referred provider.
Once the vision and mission statements have been carefully considered, don't relegate them to the back burner. Reevaluating both vision and mission is something that HME management should be doing regularly, at least once a year, so the company can revisit questions like “Is this really where we want to go now?” and “Considering what we know, is this still what we want to be and is this still how we want to get there?”
The reason that a lot of existing vision and mission statements are not developed well enough is because they are generally regarded as theoretical. Developed properly, however, these statements can be your key guidance system for the company. They are not the detailed nuts and bolts; they are the 30,000-foot view. But all of the nuts and bolts have to be in the right place so you can achieve that perspective.
Align Your Strategies
The next change is to align the company's strategies with its vision and mission. A strategy is a descriptor for a set of actions (tactics) that will be used to achieve some part of the mission.
When a company must adjust to a different business environment, the conventional (and good) method of identifying the right strategies is to consider the company's strengths and weaknesses in the context of the environment. Whatever the business environment is, it includes both opportunities and threats.
Saying that the business environment has changed is also saying there are different opportunities and threats that must be addressed. Ask this question: “Given our strengths and weaknesses, what are the implications of the current and future opportunities and threats?” The answers to this question will determine the appropriate strategies and tactics your company needs to adopt or modify.
Because change is difficult to make in any organization that involves people, it is important to map out (in the strategies) how you will affect change within the company. Consideration must be given to the training, staffing, marketing, purchasing, policies and procedures and management information systems that will support the change.
Many providers who are insightful, courageous and energetic enough to adapt to the industry's new environment will be making some change to the solution they offer and who they offer it to. When that occurs, at least two of their process groups — customer acquisition and order fulfillment — must also undergo some change.
The company's customer acquisition processes should create a new promise or message to its customers and referral sources that is in alignment with the vision and mission statement. The need for a different message is to focus on getting the best customer, not the next customer.
Today's environment, for example, is unforgiving of those providers who just ask for referrals instead of asking only for the referrals they want. Asking for the referrals that are most desirable or that best fit the company does not mean you must reject the others. It only means that no company resources are consumed by asking for the less desirable referrals.
When it comes to the company's intake or customer service departments, change is generally needed whether or not a provider is making strategic changes. For example, in most companies I visit, the intake process uses a paper form as a data collection tool. The form usually requires about six minutes of telephone time to complete. Then the data is entered to the billing system, and at that point, the time spent is a duplication of the effort it took to complete the paper form.
In some companies the paper form is scanned, indexed and stored in the document imaging system after it is entered to the computer. Any use of paper in the intake process (other than documents generated by incoming faxes) is a total waste of time and, thereby, money.
There was a time when the HME business environment didn't treat waste so harshly, but it has become merciless for providers who tolerate waste. All intake should be performed as direct entry to the billing system.
Automation opportunities abound in intake. For example, refill orders are generally taken by phone using a modification of the paper intake form. There is little to challenge a provider who will adopt automated telephone orders for refills just like pharmacies have done for years.
Many providers do not fully understand the capabilities of their billing system and get the benefit of only a part of the efficiency it is capable of delivering. So, one easy measure that boosts efficiency is learning about and demanding use of the system's capabilities. You may have to pay the software developer for the additional training, but usually it's worth the cost.
It is also uncommon that I find widespread use of desktop fax solutions in customer service, but this can facilitate the sending and receiving of faxes at the workstation. In general, customer service reps who are not in their seats are not performing the function they have been employed to do. Remember that today's business environment will no longer tolerate wasted footsteps or keystrokes.
In reexamining vision and mission and making strategy changes, an HME company needs to look at its own values, its own strengths, its own weaknesses and how they fit into the current environment. Values generally don't change very much. It's the environment that those values have to be employed in that changes.
In some cases when I'm looking at how companies can grow stronger, I find that its values have been sold out — not necessarily on purpose — but to the environment. But when a company engages in business lines and activities that don't fit its values, it does a poor job of them, and that poor job makes the company inefficient to the extent that some violation of values has entered its operations.
The most efficient HME companies are those that take their vision, their mission and their values and fit them into the environment to pick out the right business lines. When a provider is trying to work with product lines or payers or business methods that don't fit the confines of its values, then the company struggles with them, and that struggle — that friction — brings inefficiency.
Wallace Weeks is founder and president of Weeks Group Inc., a Melbourne, Fla.-based strategy consulting firm. He can be reached at 321/752-4514 or by e-mail at email@example.com.
For more business advice, see Wallace Weeks' “Better Business“ column on page 58.